Who Will Win Big In the Smart Meter Rollout?

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It might be up for debate whether smart meters — electricity meters that provide real-time information about energy consumption and enable two-way communication between a utility and a consumer — will solve the U.S. power problem. But regardless, over the next couple of years an increasing number of smart meters will get installed in our homes. That’s because President Barack Obama has called for the installation of 40 million smart meters, allocating at least $4.5 billion for direct investment in the smart grid through the stimulus package.

So, which manufacturers stand to gain from the coming smart meter rollout? Finding any kind of market share data on smart meter makers is pretty difficult because the industry is so new, explains Ben Schuman, senior research analyst for Pacific Crest Securities. According to a report from the Federal Energy Regulatory Commission in December 2008, advanced meters account for just 4.7 percent of all installed meters, though that’s up from less than 1 percent in 2006.

But if you look at the planned U.S. utility smart meter contracts, there are about 5 big companies fighting for market share in the U.S. right now, including Itron, Landis+Gyr, Sensus, Elster, and GE. According to data from the Federal Energy Regulatory Commission and the Institute for Electric Efficiency, Itron, Landis+Gyr and GE are leading the pack in inking next-gen smart meter contracts.

Itron is ahead in terms of marketshare and mindshare, according to smart grid analyst Jesse Berst. A utility doesn’t do a large smart meter rollout without talking to Itron, says Berst. The Scott Report lists Itron as the leader both in the U.S. and globally. Currently, the company’s smart meter utility contract wins include Southern California Edison, San Diego Gas & Electric and CenterPoint Energy. But Berst said that one hurdle for Itron could be the fact that the smart meter market will eventually rely heavily on software, while the hardware becomes a commodity product. Itron has been at the forefront of the hardware market, but it could have a harder time competing on the software front, Berst said.

The century-old Swiss firm Landis+Gyr has been a leader in the traditional electricity meter market in European for decades and is now partnering with many European utilities on their smart meter rollouts. But Landis+Gyr is angling for a piece of the U.S. smart meter market, too, as it’s set to get a boost from the stimulus package. When the stimulus package was signed into law, North American CEO Richard Mora said in a statement: “Landis+Gyr is ready to get to work with its utility partners to roll out smart metering projects throughout the U.S. as soon as possible.” The company, which acquired Georgia-based CellNet-Hunt in 2006, is already working with Oncor and PG&E on smart meter rollouts.

On the other hand, GE is a relatively new entrant into the smart meter market, and it doesn’t crack the top smart meter makers in terms of units shipped, according to the Scott Report. But Berst notes that the company could be “a dark horse” in the coming years. That’s because GE has been using its massive engineering expertise to develop some new advanced smart meter technology, and utilities who have talked with GE tell Berst they’ve come away impressed. The company is already working with PG&E, American Electric Power, and Oklahoma Gas & Electric, among others.

It will take a couple years to see the results of some of these smart meter buildouts, but analysts say that being able to scale and integrate meter offerings with other services, such as software-based demand management and home energy management networks, will be the dominant indicator of which companies will gain market share. Surprisingly, price (within reason) is less important. Smart meters can run from $100 to $250 apiece by the time you factor in installation costs, but because utilities are largely regulated, they just need the regulatory commission to approve the rate hike to cover the costs.

Right now, the utility industry runs primarily on established relationships, but smart meter makers like Itron, GE, and Landis+Gyr will be fighting for market share with new players, as well, in the coming U.S. smart meter boom. Keep your eye on the smart meter market as it draws more and more attention over the next six months — it should prove interesting.

This article also appeared on BusinessWeek.com

14 Comments

John Blausey

The winners will be the federal government and the losers will be the consumer. This is in no way a good idea. The smart money will be spent on solar so a person or household can get off the grid and be secure again. This is a very bad plan and a decision that is political made by a socialist politician.

kevin

If smart meters are like “demand meters” , they will be just as big of a RIP OFF!!!!!!!!! We will be paying 10 times more for our elec. Demand meters record your peak consumption and charge you for the ENTIRE month AS IF you use that much all month. They read every 15 minutes and take a reading, then the company charges you for the entire month as if you used power at the highest reading, very crooked . Very wrong, and I would Hate to be the power companys or the gov’t at judgement day!!!!!!!!!!!!! AMEN>

Grady Oder

I believe it will be difficult to predict the “winner” in the case of smart meters. Where there is a winner there has to be a loser and the big loser will be the consumer. These meters may decrease the “instaneous” demand but not the total demand. It’s difficult to get people to change their “habits” but when the utilities begin to get into one’s pocketbook, one will change. The amount of change will be directly proportional to the increase in one’s utility bill.

DigiPlumb

Good writeup. But you need to consider that the meter and the communications components that go with the meter (making a so-called “smart meter”) are often from different vendors, though this is increasingly being consolidated. One up-start on communications front is Silver Spring Networks, who has the PG&E contract. Their silcon valley hype may outweigh their heft, but they’re certainly among the leaders.

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